Cigarette Taxes

Topics: Barack Obama, Federal government of the United States, Taxation Pages: 3 (866 words) Published: November 2, 2013
Cigarette Taxes
Cigarette taxation has appeared to be a disputable issue throughout American history. The beginnings of cigarette taxation can be traced back to the late 1700s when Alexander Hamilton, the secretary of the treasury, introduced the first federal excise tax on tobacco products. The government places taxes on cigarettes to reduce the number of smokers and to increase revenue. A cigarette tax, like any other tax, increases the amount of revenue the government can spend on social programs. Though, many have said that the major increase of taxes in cigarettes has led to the expansion of the black markets and crimes. Several states have raised their tax in the past couple of years. “Currently, New York has the highest tax at $4.35, and Missouri has the lowest at $.017” (State excise tax). In addition to the state and federal tax, counties and cities also place a local sales tax on cigarettes. For example, if a smoker buys a pack of cigarettes in New York City, not only do they pay the state tax of $4.35, but they also pay a city tax of $1.50. With the federal tax of $1.01, that brings the total tax to $6.86, and pushes the price of a pack of cigarettes to approximately $12.50. The American has issued cigarette taxes in hopes that the rise in the cost will diminish the number of people smoking, leading most of them to quit sooner or later in time. “Economists Gary S. Becker, and Michael Grossman estimate that a 10 percent increase in cigarette taxes eventually leads to an 8 percent decrease in cigarette consumption” (RTI International). Some other studies have shown to decrease 4 to 6 percent. In April 1, 2009, President Barack Obama signed a tax high on his 16th day in office (Cauchon). The tax increase lifted the prices approximately 22%, shaving off 3 million smokers by 2012. Obviously, the tax hike has increased the government’s revenue. Since then, according to the tax records, the increase has brought in more than $30 billion in new revenue....

Cited: State excise tax. “ State Cigarette Excise Tax Rates.” 2009-2013. Tax Foundation, 27 Feb 2013. Web. 18 Apr 2013.
RTI International. “High cigarette taxes disproportionately burden low-income families.” ScienceDaily, 13 Sep. 2012. Web. 19 Apr. 2013.
Cauchon, Dennis. “Tax hike cuts tobacco consumption.” USA Today, 13 Sep 2012. Web. 19 Apr. 2013.
Miron, Jeffrey. “The Budgetary Impact of Drug Prohibition,” 2010. Print.
“Mohamad Youssef Hammoud sentenced to 30 years in terrorism financing case.” ICE, 27 Jan. 2011. Web. 21 Apr. 2013.
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